Wilson v. Herbert

25 A. 685, 76 Md. 489, 1893 Md. LEXIS 100

Opinion

Bryan, J.,

delivered the opinion of the Court.

Wilson and Poehlmann filed a bill in equity against James N. Herbert for the specific performance of a contract for the sale of land. On the first day of January, eighteen hundred and eighty-seven, Herbert leased a lot in the town of Laurel to Thomas M. Bond for the term of three years, at the rent of one hundred and eighty dollars a year, payable in monthly instalments. The lease contained the following stipulation : “The said James N. Herbert hereby agrees to sell and convey to the said Thomas M. Bond all of the said land and improvements by a good and sufficient lawful deed, at any time during the term of the lease, whenever the said Thomas M. Bond shall elect by giving ten days’ notice in writing to the said Herbert or his legal representatives, for the sum of two thousand ($2,000) dollars in cash, provided that all the rent due and owing is fully paid, and further, that the said Bend shall pay at the time of purchase, the full amount of rent that would have become due at the expiration of this lease.” In January, eighteen hundred and eighty-nine, Bond, in consideration of eleven hundred and fifty dollars, assigned all his interest in the lease to Wilson and Poehlmann, partners, and Herbert in consideration of fifty dollars agreed by writing under seal to the assignment, and also agreed to convey the lot to Wilson and Poehlmann for the sum of two thousand dollars “as herein specified,” meaning, of course, as specified in the lease. On the nineteenth of December, eighteen hundred and eighty-nine, Herbert by an instrument under seal continued the lease for three months from the first of January then next ensuing, and renewed his agreement to convey the lot to Wilson and Poehlmann “as specified in said lease.” He proposed to make the extension for twelve months, but Wilson and Poehlmann preferred three months, stating that they wished to pay for the place soon and save the rent. They had erected on the premises an office and store room at an expense of about four hundred dollars. Shortly before the first of April, eighteen hundred and ninety, they requested of Herbert a few days delay in the payment of the money, and he at first consented to grant it; but within a few hours afterwards withdrew his consent, stating that he wanted the money. There was evidence that Wilson and Poehlmann inferred from Herbert’s conversation and conduct, that he would receive the money if tendered shortly after the first of April, and would then execute a deed for the property; but there is nothing in the evidence which shows an agreement to that effect on his part. The money was provided for the purchase shortly after the first of April; at that time Herbert was absent in Upper Marlboro, and on his return to Laurel about the fifteenth of April, Wilson called on him for the purpose of paying the purchase money and receiving a deed for the lot. He refused, however, to execute the contract of sale, saying to Wilson “you have failed to meet your agreement, and I will not sell you the place.” At the hearing the Court dismissed the bill, and the complainants appealed.

There can be no doubt whatever that it was the purpose of the complainants to purchase this lot, and that this purpose was well known to Herbert. It would not be rational to suppose that they would pay eleven hundred and fifty dollars for a lease of this property having less than a year to run, and would pay for the privilege of purchasing it, and would also expend four hundred dollars in improvements unless they intended to purchase. Whatever may have been the case previously, Herbert could have had no doubt in December, eighteen hundred and eighty-nine, of their intention to purchase. When they applied at that time for an extension of the lease, he proposed to continue it for twelve months; but they objected to so long a time, stating that they wished to pay for it soon and save the rent. In the agreement which Herbert then executed he expressly renewed the original right of purchase. In the negotiations between the parties in March, eighteen hundred and ninety, the only question agitated was whether a delay would be granted in the payment of the money; because the election of the complainants to buy the property was regarded as fully settled. The money not being paid on the appointed day, the complainants committed a default; and if the time of payment was of the essence of the contract, they thereby forfeited their right of purchase. In deciding a question of this kind, Courts of equity examine the stipulations of the contract, and also consider the nature and circumstances of the transaction. The object is to ascertain the leading and controlling intention of the contracting parties, and to carry this into effect; although there may have been a failure to comply with subsidiary stipulations, which were introduced into the contract as means of accomplishing its general purpose. The time at which an act is to be done, or at which a payment is to be made, is in particular cases the important and indispensable condition which the parties had in view, and the controlling consideration for making the contract; but in a great many cases, these are merely circumstances which relate to the method of attaining the purposes of the contract, and are not of a vital character. When a time has been appointed for the payment of money, there are many well known instances in which equity allows payment to be made with interest after default, and thereupon preserves the rights of the delinquent party. A very familiar instance is, the forfeiture incurred by a mortgagor upon non-payment of his debt when due. Lord Eldon said that in such case the Court acts against what is the prime facie import of the agreement itself. In Decamp vs. Feay, 5 Serg. & R., 323, a vendee made a considerable default in payment of the price when due, and upon his tendering it, several months afterwards, the vendor refused to accept it, or give the deed. The Court held that the vendee was entitled to a specific performance, and the doctrine was thus laid down by Gibson, J.: “ Where time admits of compensation, as it perhaps always does where lapse of it arises from money not having been paid at a particular day, it is never an essential part of the agreement. Neither do I consider that the subsequent agreement, by which the parties stipulated, that if the whole sum should not be paid at a certain day, the payment then made should be forfeited, and the original bargain be at an end, gave the defendant (the vendor) any additional right to rescind.' ’ While we might not be willing to adopt the absolute terms in which the eminent jurist states this doctrine, there is no doubt of the general rule. In Derrett vs. Bowman, 61 Md., 528, it was said “the mere non-payment of the purchase money on the day it was due, would not in itself deprive the appellee of his right to insist on the specific performance of the contact; for the reason that in a case like this, time is not ordinarily of the essence of the contract, the payment of interest in the meantime being considered as a compensation to the vendor. ” And-we find that.even in a case at law, where the stipulation in a contract of sale was that the balance of the purchase money was to be paid in thirty days from date, it was held that the time of payment was not of the essence of the contract. Scarlett vs. Stein, 40 Md., 512. In this last case the Court notice that there was no clause in the contract making it null and void, unless payment should be made at the appointed time. It was also mentioned that the circumstances attending the execution of the contract, and the subsequent acts and conduct of the parties showed that time was not intended to be a material part of the contract. In the present case there is nothing to distinguish the stipulation for payment from that which ordinarily occurs in contracts of sale. There was no intrinsic purpose, which would be defeated by delay; nor was there a condition that the contract should thereby be rendered null and void. The substantial part of the contract was that the vendor should he paid his price for his property; and there was no special or important object to be attained by payment of the money at a precise point of time. If the vendor should be allowed to rescind the contract, the other parties would sustain great injury by the loss of their improvements, and of the large sum of money which they paid for the assignment of the lease. On the other hand the vendor will be amply compensated for the delay of payment by receiving interest on the purchase money. Interest is the compensation which the law adjudges to be the proper measure of the injury caused by failure to pay money at the time when it becomes due. This is one of the cases to which the maxim may justly be applied that "the doctrine of equity is not forfeiture but compensation. ”

The complainants did not give ten days notice in writing of their intention to purchase according to the requirement of the contract. In December, eighteen hundred and eighty-nine, they stated to Herbert that they did not wish more than three months extension of the lease, inasmuch as they wished to pay for the place soon, and save the rent; and thereupon he executed an instrument making the required extension, and contracting to convey the property to them on the original terms. It would have been a very useless and unmeaning form under such circumstances to give a written notice to Herbert. The necessary information had been given to him, and he had acted upon it by executing a written contract. Upon a consideration of the whole case, it appears to us to be within the principle stated by Judge Story: “ Where the terms of an agreement have not been strictly complied with, or are incapable of being strictly complied with, still if there has not been gross negligence in the party, and it is conscientious that the agreement should be performed, and if compensation may be made for any injury occasioned by the non-com pliance with the strict terms; in all such cases Courts of equity will interfere and decree a specific performance.” 2 Story’s Equity Jurisprudence, sec. 775. It is testified that the complainants continued to remain in possession after the refusal to make a conveyance to them, and that they paid rent up to April, eighteen hundred and ninety-one. They ought to he regarded as owners from April the first, eighteen hundred and ninety, and ought to pay interest on the purchase money from that day so long as they have remained in possession, and to be allowed a rebate of the amount of rent which they have paid. They are entitled to a decree for a conveyance of the property on payment to the vendor of the sum thus found to be due.

(Decided 13th January, 1893.)

Decree reversed, and cause remanded, to the intent that a. decree may he passed in accordance with the opinion of this Court. Costs in the Circuit Court and in this Court to he paid by the appellee.